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Aadhar Amendment Act - Highlights and Effects

Chris John

Expert

Published on: Aug 18, 2025

Aadhaar Act Amendment

The highest ruling authority in the country, the Supreme Court of India has reached a consensus on the decision regarding the highly disputed concept of Aadhaar Card and the Act implemented for the same in the year 2016. A 5-member constitution bench of the apex court has kept certain provisions of the Act intact, while others requiring biometric authentication were struck down. While Aadhaar has been a topic of discussion and has continuously been linked to issues such as the invasion of privacy, it has empowered the marginalized sections of the society and has given them an identity of their own, which outweighs the negatives. The verdict was delivered by the constitutional bench of the Supreme Court presided over by CJI Dipak Misra, Justice A M Khanwilkar, Justice A K Sikri, Justice D Y Chandrachud and Justice Ashok Bhushan. This article hopes to give you the highlights and the summary of the ruling regarding the amendment of the Aadhaar Act.

Highlights of the Verdict

  1. Aadhaar Data has been given high priority. The Court has asked the Centre to bring about a stringent law for protecting the data collected via the Aadhaar Card.
  2. Strengthening the previous point, the Supreme Court affirms the public that enough security measures are implemented to protect all the information collected. However, a new line of defense has been ordered by the Court along with a reduction in the period of storage of data in the system.
  3. An Aadhaar Card is not mandatory for opening a bank account or for obtaining a mobile connection anymore.
  4. A school admission does not require an Aadhaar Card compulsorily as stated by the Supreme Court. This comes along with the rule that students of CBS, NEET, UGC are not required to be Aadhaar cardholders to appear in exams.
  5. However, an Aadhaar Card is mandatory for filing Income Tax Returns (ITR) and has to be linked to the appropriate PAN Card.
  6. Aadhaar card is still a requirement to avail facilities offered by welfare schemes and government subsidies as it extends a helping hand to the poor and marginalized. However, children have been made an exception for this point as no child should be denied benefits from any scheme regardless of being an Aadhaar user.
  7. The Supreme Court has instructed the Central Government to take the necessary steps to ensure that migrants who enter the country unofficially are not offered an Aadhaar Card. This has been implemented as it has come to light that such individuals take advantage of the benefits provided by various social welfare schemes and government subsidies.
  8. The fundamental difference between an Aadhaar Card and the identity of a person was highlighted in the Supreme Court assuring that the biometric information collected and stored cannot be replicated.
  9. The Supreme Court has struck down the provision in the Aadhaar Act that allows sharing of data as it stands as a hindrance to national security.
  10. As per the verdict, services such as Employee Pension, Re-verification of mobile number, Mutual Fund Investments, Insurance Policies, Credit Cards, New or  Existing Post Office Schemes, New or Existing NSC Accounts, New or Existing PPF accounts or New or Existing Kisan Vikas Patra would not require the Aadhaar Card to be mandatorily linked anymore.
  11. Furthermore, online services dealing with the sale of air, train, rail and movie tickets and other private firms cannot demand biometrics and other data from their users in return for their services.
  12. The Supreme Court has assured the public that after reviewing the Aadhaar scheme and structure, it is not an easy task to profile a person based on the minimal biometric data collected.

Effect on Businesses

The Supreme Court ruling on Aadhaar will have a significant impact on payment banks and financial technology (FinTech) giants along with other service providers such as E-wallets, Instant Loan providers, online brokerage houses and lending platforms. The verdict has struck down Section 57 of the Aadhaar Act that sanctions the use of the Aadhaar Number for reconfirming the identity of an individual for any purpose whatsoever. As per industry norms, a company takes about 30 minutes or less to enrol a customer and to have them on board for their services. On the other hand, such companies take about 5-6 days to verify a customer and to conduct a physical KYC. Hence, the apex court ruling is not only likely to slow down processing for new connections and accounts but also would increase the cost of acquiring new customers for companies by Non-Aadhaar based KYC. With the quick and paperless technique adopted by most telecom and Fintech industry giants to function, this verdict may come off as a major setback. At present, Aadhaar-linked subscribers in the country would cross the count of 500 million with most in urban regions or even half of India's total mobile users.
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